Factors of Production

Factors of Production

1. LAND

   • All natural resources that are not man made.
   • Non-renewable resources – e.g. coal, oil, gold. Once used will never be replaced.
   • Renewable resources – can be used & replaced. E.g. fish stocks, forest, water.
   • Sustainable resources – can be exploited economically & will not diminish or run out. E.g. forest if managed, not sustainable if build a motorway on it.
   • Non-sustainable – diminish over time due to economic exploitation. E.g. oil

2. LABOUR

   • The human input into the production process (workers)
   • Each worker has a unique set of inherent characteristics – inc. intelligence, manual dexterity, emotional stability.
   • But workers are also the product of education & training
   • The value of a worker is called his or her HUMAN CAPITAL

3. CAPITAL

   • The stock of manufactured goods used to produce other goods & services
   • Working capital – stocks of raw materials, semi-manufactured & finished goods which are waiting to be sold
   • Fixed capital – is the stock of factories, offices, plant & machinery. It is used to transform working capital into finished products

4. ENTREPRENEURSHIP

   • An entrepreneur brings the other factors together & takes risks in setting up a business

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